Costco Wholesale Corp (COST)

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The Psychology Behind Costco's Free Sample

All of this makes for a potent combination for Costco: People come to their stores to some extent because it’s fun, and then a variety of psychological mechanisms kick in, compelling them to buy more products over a longer period of time. (Costco declined multiple requests for comment.)

Costco’s prepared-food departments also appear, to some extent, to be designed with the purpose of making the stores destinations. In 1985, Costco opened its first in-store hot-dog cart, and the price of a hot-dog-and-soda combo has remained $1.50 since then. Even with prices like this, the food courts still manage to make a profit, and in 2009, Costco sold 90 million hot dogs.

Now, the stores serve pizza as well, and—given that there were 468 U.S. Costco locations at last count—if it weren’t considered a retailer, Costco would be number 11 on the list of the biggest pizzerias in the U.S., just ahead of Round Table. And calling it a pizzeria might not be too much of a stretch: Families often go to Costco warehouses for a cheap lunch, and sometimes don’t do any shopping. “The more positive experiences people have with Costco, the more likely they are, presumably, to shop at Costco, to bring up Costco in conversation,” says Art Carden, a professor of economics at Samford University

http://www.theatlantic.com/business/archive/2014/10/the-psychology-behind-costcos-free-samples/380969/